Order a Compliance Report for that multi-unit building!

I think it was back in the 1980’s when then President Ronald Regan was negotiating a nuclear arms agreement with Mikhail Gorbachev.

Each side wanted to believe that the other side was upholding their promises.  At one point Regan coined the term “trust but verify”. The same premise holds true in a real estate transaction.

How do you really know if a building that you want to purchase is a legal duplex or for that matter a legal triplex or a 12 unit building?

Answer: Insist that your lawyer orders a Compliance Report from the City of Ottawa to confirm that the building is what the Seller claims it to be.

I have actually seen a building change hands a couple of times and this problem was never caught because a sloppy lawyer did not order a Compliance Report.

Later when a meticulous and thorough real estate lawyer was representing a new Buyer, it was discovered that the building was not what the Buyer thought he was purchasing. This can really ruin every ones day.

Your Real Estate Agent should put conditions in your Agreement of Purchase and Sale which are specific to buying a multi-unit residential building and they should do a preliminary check for you by reviewing documents available to Realtors on a website called Geowarehouse.

By this I mean if you are buying a five unit building, it is not good enough, in the Agreement of Purchase and Sale, for a Realtor to insert that the property is a “Multi Family Residential Building”.

Unfortunately this is a common error. It must go further and specify that it is a five unit building or the building has “five legal self-contained units”.

Also the Realtor should ask for the Seller to complete and sign a disclosure document called a Seller Property Information Statement.

However nothing replaces a good lawyer doing his or her own due diligence and ordering a Compliance Report for the subject property.

It will cost you a little more money and it can take up to 14 days for the city to respond to the lawyers request for the Compliance Report. In the end you will know exactly what you are purchasing, and isn’t that what you want?